NARUC Asks For Clarification on Broadband Grant Tax Status

The nation's regulatory commissioners have asked theTreasury Department to clarify that the government's broadband stimulus grantsare not taxable.

The National Association of Regulatory Utility Commissionerssays that the Recovery Act grants for smart grid energy projects have been heldup because nowhere in the act does it say whether the government billions aretaxable.

It argues that not to make them tax-deductible would becounterproductive and work against the goal of simulating the economy.

There is the same confusion about the tax status of the $7.2billion in broadband grants being handed out by the National Telecommunications& Information Administration and the USDA's Rural Utilities Service.

In a letter to Treasury Secretary Tim Geithner, top NARUCofficials say the issue is critical and that grant recipients are worried. Eventax experts aren't sure, and neither NTIA nor RUS can resolve the uncertainty,they argue.

"Nothing in ARRA indicates that the RUS/NTIA broadband(or smart grid) grants are taxable," wrote NARUC's President David Coenand telecommunications committee chairman, Ray Baum. "If the Department ofTreasury and the IRS determine that ARRA grants are taxable, it will significantlyundermine Congressional intent. It could ultimately increase costs to utilityratepayers NARUC's members are charged to protect. It most certainly willcurtail the scope of grant funded broadband infrastructure, mapping, andadoption projects."

They said they want NTIA and RUS to get together withTreasury and quickly clarify the tax status.

NTIA has already handed out over $1 billion in grants forbroadband deployment and adoption, focusing on the so-called middle mileprojects that get broadband to anchor institutions like schools, libraries andcommunity centers.

A spokeswoman for NTIA said that it had received several inquiries about the tax issue and would be posting further information on its broadbandusa.gov Website to provide further guidance to grantees.

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